The California High-Speed Rail Authority's board voted 7–2 to strip CEO Ian Choudri of his authority to independently approve and manage contracts worth less than $25 million after an investigation uncovered questionable taxpayer-funded expenses by four consulting firms. An audit found that $593,000 in travel expenses lacked proper justification or violated state rules, including premium airline tickets and rideshare trips to places like a cigar lounge and an escape room. Consultants also billed taxpayers for rides to and from Choudri's home, sometimes late at night. The authority paid the four consulting firms roughly $2 million in travel costs; the inspector general reviewed about $1.15 million of that total and found $680,500 had no prior approval.
If you have to pay a regular fee to maintain control and use of a home or other parcel of property, do you really own it? Or are you just renting it from whoever collects the money? That's the question behind a growing movement against property taxes, which is winning support across the country and may see its next big test in the form of a proposed constitutional amendment on the Florida ballot that would significantly trim taxes on owner-occupied homes.
'Property Is the Foundation of Liberty'—and a Big Source of Tax Revenue
Advocates of reform understandably champion the inviolability of private property, which is threatened by continuously rising levies. Opponents predictably include people who fear reduced government revenues, but also those who worry that cutting property taxes will shift power to state governments at the cost of local autonomy.
"Property is the foundation of liberty," argues economist Vance Ginn. "It represents the right to the product of voluntary exchange, investment, and saving—not a privilege granted by government. To tax property again every year after it has been bought with after-tax income is to deny genuine ownership. Property taxes operate like an annual wealth tax or unrealized capital-gains tax, applied regardless of income or ability to pay."
Opposing Ginn's argument in the debate is the Tax Foundation's Jared Walczak, who is not so much a fan of property taxes as a believer that they suck less than the alternatives.
"Spending restraint can reduce property tax burdens," argues Walczak. "But with property taxes accounting for 70 percent of local tax collections nationwide and upwards of 90 percent in some states, any discussion of property tax elimination must grapple with revenue alternatives."
"It is axiomatic that whatever you tax, you get less of," he adds. "Taxing income means less income-producing labor and investment, for instance. But because land is an immobile asset, taxing property does less to distort market decisions than taxing income or even sales."
Walczak also points out that while property taxes are usually imposed by local governments, most alternatives to property taxes come at the state level. That would move power further up the political food chain, away from the property owners worrying about their tax bills.
To this, Ginn responds that governments at all levels cost more than they should and that "the moral and fiscal failure of property taxes lies not only in how the money is raised, but also in how much government spends."
That means the debate over property taxes isn't just a struggle between those who want to trim the state's take and those who prefer larger government, but also between anti-tax activists and their frequent allies among advocates of local power. In a piece this week on the groundswell against property taxes, Politico's Liam Dillon notes that "the uprising's most pitched battles are being fought in Red States where the issue has emerged as yet another dividing line on the right."
Localities Are Dependent on Taxing Property
The debate over property taxes is fierce partially because governments have come to rely so heavily on them. "In fiscal year 2023, property taxes comprised 28.9 percent of total state and local tax collections in the United States, more than any other source of tax revenue, despite being levied almost exclusively at the local (not state) level," Janelle Fritts wrote for the Tax Foundation.
Property taxes in the U.S. range from roughly half a percent to just under 2 percent of assessed home value. States that rely most heavily on them, like New Hampshire (1.5 percent in 2024) and Texas (1.4 percent in 2024), also tend to leave a lot of government responsibility in local hands that might be exercised at the state level elsewhere. It's worth noting that Cato's Freedom in the 50 States ranks New Hampshire as having the second least burdensome tax regime among states, with Texas in fourth place.
The lowest taxed states in property terms are Alabama (0.37 percent in 2024), Arizona (0.48 percent), Hawaii (0.29 percent), and Utah (0.48 percent). Some states, such as Illinois (1.88 percent in 2024) and New Jersey (also 1.88 percent), tax the hell out of many things to support large and intrusive governments. Hawaii, despite low property taxes, is ranked as the most tax-burdened state by Cato.
As mentioned above, economists tend to like property taxes because they are efficient, minimally distort economic decisions, and empower localities relative to state and federal authorities. But as Politico's Dillon emphasizes, "everyone who is not an economist seems to hate property taxes."
Homeowners Don't Like the Insecurity That Comes With Property Tax Bills
Property taxes rise with assessed property valuations that homeowners have no control over, as the market shifts with supply and demand. They require what feels an awful lot like an annual rent payment to keep a roof over people's heads many already paid for. That reduces the sense of security that owners feel in their homes, since their habitation remains conditional on meeting local authorities' demands. The bite of sales taxes can be reduced by buying less, and income taxes are dependent on earning paychecks, but property taxes (with some local exceptions) come due no matter what.
Soaring property valuations in recent years drove property tax bills higher for Americans who did nothing but remain at their established addresses, though localities can and sometimes do adjust tax rates to offset rising values. USA Todayreported that "between 2019 and 2023, the median value of annual property taxes increased nearly 25%." That has energized the movement to cut or abolish the taxes.
Efforts to reform property taxes have been effective in more than a dozen states, according to Governing. Most of these efforts involved reducing taxes, though eyes are currently on Florida where Amendment 3, a proposed change to the state constitution, would incrementally raise the homestead exemption to $250,000. It also would require "the Legislature to prescribe a uniform procedure for counties and municipalities, for their respective levies, to increase the homestead exemption up to full assessed value," effectively abolishing property taxes on owner-occupied dwellings.
As a constitutional amendment, the measure requires 60 percent of votes to pass. Polling shows more support than opposition, but not necessarily at the supermajority level necessary for victory.
According to the Tax Foundation, in Florida, "the statewide average sales tax rate would have to rise from 7.02 to 15.34 percent to replace the property tax" with equivalent revenue. Rates could widely vary if localities implemented sales taxes instead of leaving them to the state.
Of course, that assumes state and local governments continue spending and providing services at the same level. But as economist Ginn points out, the problem lies not only in how property taxes raise money "but also in how much government spends." If the property tax revolt represents revulsion not just at the tax, but at the expense of large government, that may require less revenue to fund a smaller Leviathan.
A proposed "wealth tax" on California's billionaires could backfire and cost the state tens of billions of dollars in the long run.
If the proposed tax drives wealthier residents out of the state, California could end up losing between $1 billion and $3.5 billion annually in income taxes, according to a working paper published this week. A pair of researchers at Stanford University warn that the state could end up losing an estimated $39 billion because of the consequences of the wealth tax.
"These findings suggest that the Billionaire Tax Act will not fulfill the primary functions for which it was designed," write researchers Benjamin Jaros and Joshua Rauh.
Voters in California will decide next month whether to impose the one-time, 5 percent tax when they vote on Proposition 40. The ballot measure is dividing Democrats—Gov. Gavin Newsom opposes it, while progressive Rep. Ro Khanna (D–Calif.) claims it is the "most important ballot initiative in America and a fight for the soul of our party."
And it's already spurring some billionaires to flee the state—including venture capitalist Peter Thiel and Google co-founder Larry Page. Including those two, the seven billionaires who have publicly said they are leaving the state represent more than $539 billion of the nearly $1.9 trillion aggregate net worth of California's billionaires, the researchers note.
With other departures likely happening more quietly, the new study estimates that the tax will generate about $30 billion, a far cry from the $100 billion that the tax's supporters expect. The "behavioral response" from billionaires in California "has eroded most of the projected tax base," write Jaros and Rauh.
That's still a pretty big pot of revenue. In the long run, however, the state is likely to lose out.
After running 100,000 simulations using different assumptions, the two researchers report that "85 percent of plausible outcomes produce a negative" result in state revenue.
Capital is always mobile, despite the best efforts of politicians. And if you were a billionaire living in California, why would you stick around?
Polls show voters are narrowly divided over Proposition 40. A Politicopoll published earlier this month showed 46 percent of voters plan to vote for the measure, while 43 percent oppose it. Voters were similarly divided when asked if they expected it to pass or not.
My recent trip to Malibu from Los Angeles was my first post-wildfire drive through the Pacific Palisades and, my goodness, there's nothing like seeing something with one's own eyes to grasp the enormity of the devastation. The obliterated hulks along Pacific Coast Highway 21 months after the tragedy raise multiple issues, including ones related to the excruciatingly slow rebuilding process.
This being California, the state has yet to grapple sufficiently with the reasons the wildfires started—and the failed response to them. But late is better than never, so I applaud a new report that Gov. Gavin Newsom commissioned from the nonprofit Fire Safety Research Institute. Released this month, it looked at the nitty-gritty of how the fires started and how multiple agencies reacted. The results aren't pretty.
The New York Times provided the best summary: "The comprehensive analysis found that while several state and local agencies fell fatally short in their preparation and response, the clearest lesson from the disaster was the extent to which climate-driven fires are outstripping modern firefighting." The report found LA officials failed to take the fires seriously enough at the outset. County officials handled the Altadena evacuations in a "chaotic" manner. They were unprepared for the intensity of the fire storms.
We've all read about some of the inexplicable stupidity. The Santa Ynez Reservoir was empty during the fires because of a repair to its protective cover, yet it's empty again (although it's in the process of being refilled). The California Coastal Commission allegedly delayed new permits for the Los Angeles Department of Water and Power to install fire-resistant utility poles because of concerns about an endangered weed. The commission disputes that report—and there's still heated debate involving multiple agencies.
If we can't get multiple agencies on the same page on one minor question about milkvetch, I'm skeptical California can deal with the basics. The report said the tragedy involved "multiple interlinked systems rather than any single factor or failure." In one example by Patch, the Los Angeles County Sheriff's Department remained at normal staffing levels. The Los Angeles Fire Department was reportedly so concerned about overtime costs that it reportedly responded slowly.
This epitomizes California's approach to everything: Bigger agencies, higher spending, and expanded workforces. The left hand never knows what the right hand is doing. Other priorities outside of public protection—budgeting, meeting union demands, turf battles—take precedence. This isn't malicious, but reflects the fundamental nature of government.
Even after the state suspended rebuilding regulations, the rebuilding process is still in a quagmire because of the number of involved agencies. How could California realistically streamline a wildfire-fighting process that involves an alphabet soup of local, county, regional, and state bureaucracies? Even the feds are involved because around 45 percent of the state's land area is owned by them. The wildfire issue is a statewide problem, so the conclusions should resonate beyond LA.
Furthermore, the report argues that California needs to change its overall approach toward wildfire resilience. Back to the Timesanalysis, which noted that climate-driven fires are becoming more intense and that's challenging the traditional ways that the state has battled wildfires. But how often have you seen governments respond efficiently to external economic or environmental changes? All governments are slow-moving freight trains.
Everything government does is mired in the past. As an unrelated example, the nation's education system isn't much different than the one created in the 1800s—despite all the technological changes that should have sparked a revolution. When COVID hit, private schools adapted and provided successful at-home learning, whereas the public schools watched students fall behind and truancy rates soar. It's not any different with any public service, including firefighting.
My fear: California policymakers will read that summary about "climate-driven" fire risks and do what they always do: blame the problem on climate change and double down on the state's counterproductive climate policies. They are designed to change the entire Earth's weather patterns (even though California is responsible for less than 1% of the world's greenhouse emissions), rather than adjust our regulatory system to make us more resilient in the face of warming trends.
California's union-controlled state and local governments aren't about to adjust firefighting budgets so they can further stretch their dollars. State firefighters generally earn more than $250,000 in annual total compensation, with some Los Angeles firefighting officials earning pay levels that boggle the mind. Instead of trimming costs, California has been ratcheting up pay levels.
California state officials haven't even been forthright about their approach toward brush clearance. For instance, four years ago Newsom touted an important wildfire-prevention program that at the time hadn't completed a single project. We hear promises, but little action.
That's government for you. It doesn't do anything well and is incapable of learning the right lessons even from the best reports. Driving along PCH was just my latest reminder of this sad truth.
This column was first published in The Orange County Register.
The federal government just closed fiscal year 2026 with a deficit of nearly $2 trillion, according to figures the Congressional Budget Office (CBO) released last Thursday. Only the two pandemic years of 2020 and 2021 were worse. Today, though, there is no recession and no emergency. These enormous budget deficits are the new normal.
The usual response to a deficit warning is that the government just needs more money. It doesn't. Thanks to the remarkable strength of the private sector, federal revenue rose by 3 percent, to more than $5.4 trillion, over the fiscal year. But spending rose by 6 percent, reaching $7.4 trillion.
Some will blame the Supreme Court for striking down most of President Donald Trump's tariffs and forcing the government to issue refunds. But even if Washington had kept the $130 billion in illegal levies, it would cover less than one-tenth of the gap. Tariffs were never a serious revenue source at our insanely high level of spending.
Look at where the money went. Spending on the three main entitlement programs—Social Security, Medicare and Medicaid—grew by 7 percent. That's faster than total spending growth. Defense grew by 5 percent. Interest on the debt rose by 11 percent, exceeding $1.1 trillion. That last figure is the bill for every earlier year of borrowing—years when Washington was sending clear signals that it isn't serious about fiscal responsibility.
If you want to see where such irresponsibility can lead, look at France. The country that big spenders from Paul Krugman to Sen. Bernie Sanders (I–Vt.) have cited as proof that big government is viable and full of upsides is now on the brink of a serious crisis. France's debt equals 120 percent of its gross domestic product (GDP), and interest payments are rising quickly. Slow growth and social unrest aren't helping.
The U.S., of course, has some advantages that France doesn't, largely because we're a country of innovators with a private sector unmatched at creating wealth. Nonetheless, debt that is swelling out of control should still worry us. First, the same anti-wealth and anti-growth forces that brought France to where it is now are gaining popularity here. Second, we too will see debt reach 120 percent of GDP in a few years, and our interest payments are already consuming an alarming share of resources.
A wise Congress would put us on safer footing if only because debt raises interest rates for everyone, from homebuyers to small businesses. This operates as a drag on growth, and hence on wages. In other words, controlling debt should be part of an affordability agenda in the same way as streamlining regulation.
When legislators decide to take affordability seriously, I recommend looking at a September Advancing American Freedom (AAF) report on this topic. Its section on fiscal restraint offers a useful menu of reforms, including targeting the programs that most drive the debt.
Start with Social Security. Under current law, benefits will be cut by roughly 20 percent when the program's trust fund runs dry in the early 2030s. Nobody believes Congress will actually let that happen, but we'd better hope its answer isn't to double down by borrowing the difference between payroll taxes and benefits.
Nor are tax increases an option. The payroll tax meant to fund entitlements is now 12.4 percent of wages. It began at 2 percent when Social Security was first rolled out. It is also the most burdensome tax for many Americans. Enough already. The fixes AAF fellow Rachel Greszler proposes are worth considering: Index the retirement age to life expectancy, use an accurate inflation measure for cost-of-living adjustments, and move gradually toward a flat universal benefit that protects lower-income retirees while ending Social Security's de facto welfare for the wealthiest.
Next is Medicare. More than 40 percent of its financing already comes from general revenue rather than from payroll taxes. The report recommends converting the program to premium support, giving beneficiaries a fixed contribution to spend on traditional Medicare or on competing private plans. It would also raise the eligibility age to 67, matching Social Security, and trim subsidies for well-off seniors. That's a start.
As for Medicaid, the problem is one of pricing. And yet competition based on price—the best cost-control tool—has never been seriously tried. Washington covers 90 percent of the cost of states' expanded Medicaid programs for adults. A state can buy a dollar of spending with just a dime of its own money. Changing the states' incentives would be key here. Implementing risk-adjusted per-capita caps, through which the federal government would give states a fixed amount per enrollee, would do just that. States would pay for their own inefficiencies or would be able to use every dollar they save by becoming more efficient.
The same logic supports returning more welfare programs to states, starting with the federal share of the Supplemental Nutrition Assistance Program. State governments have to balance their budgets in some form.
None of these reforms are painless. But the alternatives will prove far more painful. The U.S. will either continue paying a slow, unlegislated tax called inflation or face a fast, ugly fiscal crisis when bond buyers stop giving Washington the benefit of the doubt.
A California state auditor found waste, mismanagement, and misuse of taxpayer money inside several state agencies, including the office of state Controller Malia Cohen, which is responsible for managing state finances and payroll. The investigation found that for over a year, senior officials in Cohen's office deliberately stalled the recovery of more than $33,000 in salary overpayments to two employees, canceling a required payroll deduction while considering an alternative plan to seek state payments on the employees' behalf. Officials never carried out that plan, and the auditor concluded that the office violated state law by failing to collect one employee's debt. The investigation also found that two managers worked remotely from Idaho, Tennessee, and Alabama despite rules restricting out-of-state telework. Across nine cases involving multiple state agencies, the auditor identified about $885,000 in wasted, misused, uncollected, or improperly spent public funds.
The Republican congressman who hopes to be the next governor of Michigan has a plan to help American businesses hurt by President Donald Trump's tariffs.
Is he proposing to abolish those tariffs? Hahahaha, oh please.
Instead, Rep. John James (R–Mich.) has introduced a bill that would use some tariff revenue to offset the economic harm being caused by…the tariffs.
James' proposal, the Tariff Relief for American Development and Employment Act of 2026, would create a new tariff relief fund to be accessed by American businesses that "demonstrate actual tariff-related economic injury."
"Michigan is disproportionally affected by the trade war, so it's reasonable to use tariff revenue to reduce the effect on Michigan businesses and workers," James said in a statement announcing the legislation.
To qualify for the money, businesses would also have to pledge to maintain existing production and employment levels. The bill instructs the Treasury Department, which would administer the fund, to give priority to businesses with larger numbers of American workers and those that avoid layoffs and boost worker pay.
In other words: Pay the tariffs first, then do a bunch of paperwork and cross your fingers that the bureaucrats at the Treasury decide that you qualify for reimbursement. And in the meantime, don't cut production or lay off workers—things a business might naturally do in response to a new tax burden—or the federal overseers might not favor you.
"You guys remember when Republicans used to criticize Democrats for imposing costly, convoluted taxes and then giving some Americans their own money back?" asks Scott Lincicome, vice president for general economics at the Cato Institute, in response to James' proposal. Indeed.
For that matter, remember when Republicans understood that concentrating more economic decision-making power in Washington wasn't the way to help American businesses? This bill requires businesses to jump through a series of hoops—a process that will add more costs and complexity on top of the tariffs—and creates more incentives for executives to work harder at currying favor in Washington rather than succeeding in the marketplace.
The fact that James is running for governor in Michigan—and trailing in the polls—likely sheds some light on his motivations here.
In Michigan, manufacturing employment has declined since April 2025, when Trump launched his second-term tariffs on what the White House dubbed "Liberation Day." Meanwhile, Michigan households have paid more than $23 billion in tariff-related costs since January 2025, according to a tracker maintained by the National Taxpayers Union Foundation.
By acknowledging that the tariffs are hurting businesses in Michigan, James becomes the latest Republican to openly break with the president over his signature policy. Former congressman Mike Rogers, who is running for Senate in Michigan, has TV ads calling for an end to what he calls the "tariff war."
It is good that Republicans are finally admitting the reality of the tariffs. Study after study has shown that the import taxes are imposing costs on American businesses and consumers. Last week, the New York Federal Reserve concluded that the average price of 67 common household goods would have fallen over the past year, if not for the tariffs. Instead, those prices increased by about 3 percent.
Fixing that requires repealing Trump's tariffs, rather than constructing a new labyrinthine process for funneling some of the tariff money back to certain businesses.
James' bill is a deeply silly proposal, but there's also something quite pathetic about this. James is, after all, a member of Congress. You know, the branch of government that the U.S. Constitution vests with control over trade and tariffs. You don't need to build a bureaucratic Rube Goldberg machine to "reduce the effect [of tariffs] on Michigan businesses and workers."
You just have to do your constitutionally appointed job and tell the president that he can't unilaterally raise taxes on Americans whenever the mood strikes.
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